Direct action could fail even without Palmer United Party

Lisa Cox

Tony Abbott's "direct action" climate change policy is almost certain not to pass the Senate in its present form – even if the Palmer United Party were to change its position and vote for the plan.

Independent senator Nick Xenophon said on Friday that he would not vote for the Coalition's policy unless there were substantial changes, including measures to ensure companies comply with the scheme.

Fellow crossbench senator John Madigan, of the Democratic Labour Party, said he doubted whether the government was committed to the policy.

Environment Minister Greg Hunt on Thursday unveiled key details of the centrepiece of direct action, an emissions reduction fund, and declared the government would ''easily'' reach an emissions reduction target of a 5 per cent cut below 2000 levels by 2020.

Senator Xenophon said he was not convinced by the white paper, which proposes a $2.55 billion fund to pay polluters to cut their emissions. Companies would bid for funding through a reverse auction process run by the Clean Energy Regulator.

''The short answer is I want there to be modifications,'' Senator Xenophon said. ''It needs to be strengthened and amended to be more robust.''

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Senator Madigan said he was concerned some companies that had spent years switching to more efficient methods of production would not benefit, and questioned how committed the government was to its own plan. He said the Coalition had four years to develop a policy, but the white paper was just "a diatribe of words" that left too many questions unanswered.

"Is this fair dinkum? I just don't know," he said.

Other crossbench senators-elect Bob Day, of Family First, and David Leyonhjelm, of the Liberal Democratic Party, have indicated they would not support the policy.

It means that even if the four Senate votes aligned with Clive Palmer were to support the scheme, it would fail while Labor and the Greens are

opposed. The government needs six of the eight crossbenchers to ensure its legislation would pass.

While the government can include the funding for direct action in budget appropriation bills, separate legislation is expected to be needed to set up the scheme's architecture.

Economists and climate experts were quick to criticise the government's white paper for failing to answer key questions, including how much it expected to pay per tonne of carbon dioxide abatement, how the scheme would be policed and how the government intended to get it through a hostile senate.

Mr Hunt has said the government would take at least 12 months to introduce safeguards and left some doubt as to whether there would be penalties for companies that increased their emissions above historic levels, declaring the government did not want to make revenue from the scheme.

Senator Xenophon said he believed direct action had potential and he was open to negotiations with Mr Hunt. But he said the ''the worst possible result would be to get rid of the carbon tax and not replace it with a credible alternative” – and that an emissions trading scheme would have been simpler.

He said the government had to toughen the policy to force companies to comply and should offer longer contracts than the five years now proposed.

''There should also be some scope to have international permits, provided there is a robust mechanism to assess that those abatements occur overseas,'' he said.

Mr Hunt said on Thursday that he was prepared to talk with each of the crossbench senators and Mr Palmer.

Mr Palmer has declared direct action ''hopeless'' and threatened to block the carbon and mining taxes if legislation on the policy was not brought to the Senate for debate.

Incoming PUP Senator Jacqui Lambie told Sky News on Friday that she would vote to repeal the carbon tax, but with ''strings attached'', including the retention of payments to orphaned children of war veterans.